Treasurer Wayne Swan welcomes rate cut

The Reserve Bank of Australia (RBA) cut the cash rate by 25 basis points to three per cent, in a move that was widely expected by financial markets.

"Today's rate cut from the Reserve Bank is the early Christmas present that hard-working Aussies deserve," Mr Swan told reporters in Canberra.

"We've now had the equivalent of seven rate cuts over the past year and of course that's been made possible by the government's economic management, strong budget management and of course, contained inflation."

Mr Swan said rate reduction also coincided with low unemployment at a time when Australia's economic growth was in better shape than many other developed economies.

"We understand that not everyone out there ... is on easy street," he said.

"But having much lower interest rates, than we have had particularly under the Liberal party, is a big win for Aussie families around Christmas time."